Corruption charges pile up against former NDMC heads

The Anti-Corruption Commission (ACC) has accused former National Disaster Management Center (NDMC) heads Abdulla Shahid and Mohamed Shahid of defrauding the state of MVR 250,000 (US$16,181).

The two men (unrelated) had authorised payment from the state budget for an electricity generator, after it had been donated to Haa Dhaal Kumundhoo Island by MP ‘Colonel’ Mohamed Nasheed via a private company, the ACC said.

In June 2013, police and the ACC accused the former State Minister Abdulla Shahid and former NDMC Director Mohamed Shahid of fraud involving MVR24million (US$1.55 million).

Regulations on public finance management require state bodies to obtain multiple price quotations for any purchase worth more than MVR25,000 (US$1,618). The requirement can only be bypassed in a situation of emergency.

However, Abdulla Shahid had admitted there was no emergency in Kumundhoo case, said the ACC.

According to the commission, the Finance Ministry had allocated MVR250,000 in the 2010 state budget for procurement of a second-hand generator for Kumundoo on the President’s Office’s order.

The Finance Ministry specifically ordered the NDMC to disburse funds as per public finance management regulations, the ACC said.

Instead, the NDMC deposited the funds directly to a shareholder of the company involved in donating the generator for Kumundhoo. There only communications between the NDMC and the company were regarding the payment, the ACC said.

“Investigations prove this transaction violates the Public Finance Act. [The generator] was not procured by the state, but by an MP for his constituency in his personal capacity, and investigations prove the state’s payment for [the generator] is abuse of position to benefit a third party,” the ACC said.

The ACC does not clarify the connection between MP Nasheed and the company.

Mohamed Shahid is the brother of MP and former Speaker of the People’s Majlis Abdulla Shahid.

The commission has recommended the prosecutor general file charges against Abdulla Shahid and Mohamed Shahid for abuse of position and order them to reimburse the MVR250,000 to the state.

The Maldives Police Services in February 2013 arrested Abdulla Shahid and Mohamed Shahid in a corruption case involving MVR24 million after an Auditor General’s special report revealed the NDMC had photocopied, edited and reused ‘Credit Purchase Order Forms’ used in 2005, to withdraw the MVR24 million from the centre’s budget at the Finance Ministry.

The ‘Credit Purchase Order Forms’ were originally given to the Disaster Management Centre in 2005 to withdraw cash from the Tsunami Recovery Fund.

The auditor general’s report also suggested that the finance ministry was complicit in the alleged fraud.

Police have requested the prosecutor general press charges against Abdulla Shahid, Mohamed Shahid and seven other individuals.

The ACC in March 2012 had also accused the NDMC of corruption in a 2006 housing project worth MVR18million.

In 2013, the commission began investigation in 1316 cases of corruption, and completed 620 cases. The ACC forwarded 178 cases for prosecution.

Despite increased reports of corruption, the conviction rate is very low in the Maldives.


Gan Council fears “health disaster” after severe sewage spill

Laamu Atoll Gan Island Council has raised fears of an imminent “health disaster” following a severe sewage spill on the island.

The spill was caused by damage to pumps and septic tanks in the sewage treatment facility. Recent rains have spread the sewage throughout the island, Gan Council President Ahmed Salah told Minivan News today.

The council is trying to contain the sewage, but have received no help from any government office, Salah said.

“The pumps in the system are not working, and the [septic] tank is also damaged. So when sewage effluent gathers in the tank it overflows and spills out. But this has got worse with the rainy season, the waste is being carried across the island through the puddles. And sometimes it is overflowing from the toilets, leaving houses and rooms filled with waste,” he said.

The spill poses “enormous health risks,” Salah said. Exposure to sewage can cause several infections including gastroenteritis of the stomach and hepatitis.

“We have asked the hospital to be on alert for a medical situation, and we have also informed the Ministry of Health and other authorities. We told them we are facing great health risks here and we have asked them to take action,” he said.

According to the council similar incidents have occurred on the island during the rainy season. The 5,500 strong population is among the biggest in south central Maldives.

“It was the first thing we discussed in the new council as well. We informed the ministries, we even went to Malé to bring this to their attention. We wrote to the disaster management center, but no action has been taken yet,” Salah said.

The sewage system at fault is located at the new settlement of tsunami-displaced population that moved to Gan from Mundoo and Kalhaidhoo Islands in 2007.

The sewerage project was funded and implemented by the International Federation of Red Cross Societies (IFRC) as part of their tsunami recovery work. After the project was completed, it was handed over to the government of Maldives.

Salah said no one has taken ownership of the system since it was handed over and said he believed the spill had taken place due to lack of maintenance.

“No one took the responsibility for managing it. The council doesn’t have the financial capacity to handle it, and without any ownership and repair it eventually broke down. We have discussed the issue with Fenaka [state-owned utility corporation] as well, but they won’t take charge until the system fully repaired. Their estimated cost for repairing it is above MVR1 million (US$ 64,850),” he said.

The council is now trying to manage the situation by using a mobile tank called bowser to drain the waste into the sea. The bowser was donated as part of the sewage system.

“It [the bowser] has a very small tank, even with 20-30 rounds we are unable to drain it to a level where people can use the toilet. We are trying to find a way to control the situation even if it is by pumping it all in to the sea,” he said noting that some households are not using the toilet.

When the council approached the National Disaster Management Centre (NDMC) for a solution, the office said they could not offer any help as the sewage spill cannot be considered a disaster.

Speaking to Minivan News today, an NDMC official confirmed that the situation cannot be considered a disaster as it had developed gradually. The NDMC said the sewage project was the responsibility of the Ministry of Housing.

However, the Housing Ministry has said the Ministry of Environment and Energy was responsible for the project. The Environment Ministry was unable to comment on the issue at the time of publication.

MVR85 million sanitation facility is being built on Gan Island for areas that do not have a sewage system with assistance from the French government.

Salah said the council has proposed to join the old and new systems, but experts have said the task is impossible as the two systems are incompatible.


Emergency water supplied to Alifushi bacteria infested, says council

The emergency water supplied to Alifushi island contains bacteria and dust, the island’s council has said.

Vice President of the council Ibrahim Shuaib said that, following a water shortage,  the island requested 185 tonnes of drinking water from the government – the capacity of the council’s water tanks.

After the island was  presented with 40 tonnes of water, it was subsequently found to be bacteria infested.

“After we received complaints about the water, we tested a sample from the health center here. They found that there were bacteria and dust in it. So we have asked not to use that water,” Shuaib said.

He said that complaints have officially been filed with the National Disaster Management Center (NDMC) and the Environment Protection Agency (EPA).

“The EPA asked to send an official letter – we sent that too. But we still haven’t got an answer. Some people are now using that water after boiling,” revealed Shuaib.

Speaking to Vnews NDMC denied the claims, saying that the water was produced at Dhuvaafaru water plant and that no complaints had been received from other islands that had received water from the same plant. Both the EPA and the NDMC are investigating the matter.

With a population of 2700, the council estimates there are approximately 1600 people currently residing on the island. According to the council, the island faces water shortages every year around this time.

Traditionally, Maldivians have depended on groundwater, supplemented by rainwater, for drinking and cleaning. However, the contamination of ground water following the tsunami, and the failure to harvest rainwater, means that water shortages during dry periods are increasingly common.

While every house in capital Malé city is supplied with desalinated water, there are no sustainable systems to supply water on most islands. Water shortages all around the country have become a regular occurrence in the past few years during the dry period – which falls between February and April.

According to the NDMC, during the dry seasons of 2009 and 2010, the Maldivian government supplied desalinated water to over 90 islands at a cost of Rf10 million (US$640,000).

Last year between 3 February and 25 April 2013, some 53 islands reported water shortages to the NDMC. Plans have been underway to find more sustainable solutions to the issue in the past few years.

Minister of State for Environment and Energy Abdul Matheen Mohamed has said that the government was emphasising integrated water management systems in order to make the best use of the resources currently available.

“Our policy is to use the available resources as much as possible,” said Matheen. “Just basically to reduce the water costs.”

Earlier this week he island of Gulhi, in Kaafu atoll, became the first place in the world to produce desalinated drinking water using waste heat from electricity generation.

The project – a joint venture between state electricity supplier STELCO and UK registered charity the Aquiva Foundation – can produce around 8000 litres of water for local consumption.

In January, the Abu Dhabi Fund for Development chose the Maldives from amongst 80 applicants to receive concessionary loans worth US$6 million (MVR92 million) for a clean energy project which could produce up to 62 million litres of desalinated water per year.


Government misled by NDMC’s management of Moreway money

Senior members of Moreway Construction Company and the National Disaster Management Center (NDMC) have been implicated by employees of NDMC and the French Red Cross (FRC) for their alleged corrupt involvement in a 2005 Laamu Gan tsunami housing project.

“Moreway is a scapegoat for forgeries and fabrications committed by the Arif brothers Ahmed and Abdullah, and Mohamed ‘Dhigali’ Waheed,” alleged one member of the business community familiar with the individuals, who wishes to remain anonymous.

Dhigali is a former shareholder and current executive manager of Moreway Construction. Ahmed Arif owns Apollo Holdings Company, which has been linked to Moreway, while Abdullah Arif, formerly director of Moreway Arun Excello, today holds shares in Lotus Company.

The Anti-Corruption Commission (ACC) recently entered NDMC with police forensics experts to review files relating to a Rf18 million (US$1.16 million) payment issued to Moreway by the government in May. The ACC stopped a second payment of Rf15 million (US$973,000) in August on suspicion of corruption.

In 2005, the FRC tendered a US$7 million post-tsunami housing project for Laamu Gan, accepting bids from several companies, including Moreway, in a joint venture with Indian company Arun Excello and local company Aima. Although the project initially proposed 460 houses, complaints of insufficient conditions and finances prompted the FRC to reduce that number to 240.

NDMC Senior Project Manager Mohamed Waheed said Moreway’s complaints of insufficient financing and obstacles to construction prevented the company from fulfilling its contract, although at the time, claimed Waheed, imported materials were duty-free. A former employee of the French Red Cross, Adam, added that Red Cross site inspections and budget plans were nearly fool-proof. But “they were always demanding money from FRC, they had all kinds of excuses,” said Waheed.

Meanwhile, Arun Excello had abandoned the project mid-way due to frustrations with Moreway, incurring a loss of US$300,000.

Representatives at Arun Excello had not responded to inquiries at time of press.

After building 80 houses, Moreway’s contract was terminated by the FRC and the project handed over to Maldives Transport and Contracting Company (MTCC) under the government’s remit.

Moreway was subsequently sued by NDMC on behalf of the Maldivian government for losses incurred by the unfinished project. In November 2007, the Civil Court delivered a verdict requiring Moreway to pay US$2.3 million to the government and granting NDMC the right to sell Moreway property at their construction site if the money was not paid within one month.

Sources say the money, due four years ago, has not yet been paid.

“Misleading” letters

Although payments were released to Moreway this year by the Finance Ministry, Waheed claimed that the government has been misinformed.

On April 19, 2011, Deputy Minister of Housing and Environment Ahmed Zaki sent a letter to Finance Minister Ahmed Inaz stating that a sixth invoice submitted by Moreway in March 2007 had yet to be paid, and requested that the ministry release the funds.

In response, Inaz said budget constraints prevented the money being allocated to NDMC, “so, money is to be paid from the NDMC budget.”

Further letters obtained by Waheed illustrate government confusion around the issue. In what Waheed called “misleading letters” between the Finance Ministry and NDMC, NDMC personnel requested the government to pay expired contractor invoices for a project which it had not tendered. At Zaki’s suggestion, the Finance Ministry reallocated money for current housing projects in Dhuvaafaru and Vilufushi to facilitate these payments, which were made using the current dollar-rufiyaa exchange rate.

Although the first payment voucher, processed in May, required Mohamed Waheed’s authorisation, his name had been crossed out and replaced by Deputy Minister Adam Saaed’s, who authorised the voucher along with Zaki.

Asked why this had been done, Waheed speculated that “they thought I wouldn’t sign it, and since Saeed is a friend of Zaki’s they had him sign it. I don’t think he even knew about it, maybe he signed it without thinking much.”

Meanwhile, documents used to obtain these payments are in dubious standing. Waheed points out that only copies were submitted to the Finance Ministry. “Who will accept invoice copies these days? Not even a small child!”

FRC officials also pointed out that the invoices had long been considered invalid.

Emails exchanged between Waheed, FRC senior project manager Brett Campbell and FRC construction coordinator Xavier Chanraud confirmed that all legitimate invoices from Moreway had been paid in full by the time FRC closed its housing projects and left the Maldives.

Chanraud recently stated that, “The FRC has closed all of its housing projects in the Maldives years ago and has already paid 100 percent of its contracts value through NDMC, which includes all defect liability retentions to the contractors. I do not think those invoices are still eligible, especially if rejected four years ago by the NDMC for technical reasons.”

Campbell added that the Civil Court’s verdict against Moreway indicated that “not further payments were due to Moreway.”

In reference to requests for additional payments for access road construction, Campbell said those claims were “discussed at length” and “deemed to be a contractor’s cost.”

Then NDMC Chief Coordinator Abdulla Shahid allegedly rejected the invoices at the time on similar grounds.

“It is questionable how these invoices made headway into NDMC budget section [in 2011],” Waheed wrote in a statement. “These are not outstanding payments to Moreway as one would think and FRC does not recognise these invoices as pending.”

When the invoice for a second payment was authorised by Zaki and NDMC chief coordinator Sheikh Ilyas Hussain and submitted to the Finance Ministry, Inaz questioned its validity against Moreway’s pending debt to the government.

Zaki then took the invoice with comments from NDMC Finance Director Mohamed Shiyam’s desk and passed a new copy to someone else for processing, Waheed alleged. Copies of both invoices with clear discrepancies were shown to Minivan News in private interviews.

The Maldives’ current Red Cross affiliate office, the International Federation of Red Cross (IFRC), was unable to comment on the case.

A blind spot

Sources at NDMC and formerly the FRC agreed the previous regime’s corrupt reputation has left the current government with a blind spot.

“At the time, the government was too corrupt to get money for projects,” said Waheed. “So the FRC was funding the project, but after Moreway could not complete the project FRC left and the government stepped in.”

Government bias may have pervaded the project from the start, however. Moreway’s original bid was rejected over a fake bank guarantee, Waheed pointed out, and the company had to go to court to clear its name before re-submitting its bid.

“This is how things were done then, I don’t know why Moreway was selected but that was Gayoom’s regime,” he said.

Internal complications at the Red Cross were also rumored, although a source familiar with the operation could not confirm the reports.

For Adam, the central issue in the Moreway case is ignorance. “GoM does not understand the discrepancies in payments and procedures, and has not been properly informed of the project, so it is being charged for variations that were not approved by FRC,” he said.

According to Adam, the “local procedure” leaves project tendering and awarding to the Ministry and does not include consultants. It is “the only procedure Maldivians know,” and supports a “culture of embezzling state funds” whereby invoices are frequently submitted, rarely checked, and often paid.

FRC’s procedure is more meticulous and independent, Adam explained. Consultants are included in the bid review process, and officials at local and international FRC offices review projects alongside NDMC officials and consultants.

Had the government been more aware of FRC’s procedures, Adam said it would have noticed that the recently-paid invoice had not been signed by a consultant or passed through the review process at FRC.

The trickle-down effect

Distribution of the Rf18 million (US$110,000) is unclear. One source said it was obvious to anyone familiar with the business community that Dhigali “has profited personally, that he is a crooked businessman is known across the whole Maldives.”

A source familiar with the business community implicated Dhigali in a check fraud case involving companies Apollo and Lotus. The Arif brothers are currently shareholders in Lotus, and were allegedly issued a bad check by Apollo, in which Dhigali is a shareholder.

Other sources believe that anyone involved in processing the payments has also received a share.

The Arif brothers, said to have split associations with Dhigali earlier this year, were reportedly unaware that the payments were made. Ahmed Arif avoided scheduled interviews with Minivan News, and Dhigali did not respond to phone calls.

To date, Moreway’s debt of US$2.3 million has not been paid.

Breaking the Silence

“This is a big fraud and corruption case involving senior members at the government and at NDMC,” said Waheed, who said he suspects political tensions could make the ACC’s investigation difficult. “I’ve told Ilyas and Zaki not to do this. But Ilyas said he is helpless because he is not part of the ruling party. Zaki is MDP, though, and I think the two don’t want to have a conflict.”

While Waheed believes the ACC “is now more professional than before, and we should attach some faith to their investigation,” he chose not to report his findings to the commission.

Instead, he wrote to the President. “Because this involves so many government members I thought it was best to go to the government first, before reporting anything to an outside body. But when I spoke with them they were nervous, they didn’t want this thing to be talked about.”

Minister Inaz had not responded to phone calls at time of press, and Ilyas refused to speak to Minivan News. Deputy Minister Zaki denied all allegations.

ACC’s investigation of NDMC is currently underway.

Correciton: Previously, this article stated “Zaki then took the invoice with comments from Inaz’s desk and passed a new copy to someone else for processing.”

It should have read, “Zaki then took the invoice with comments from NDMC Finance Director Mohamed Shiyam’s desk and passed a new copy to someone else for processing.”